PETALING JAYA: The latest manufacturing data points to stronger second quarter of financial year 2026 (2Q26) economic growth, although analysts say businesses remain cautious about expanding operations amid geopolitical uncertainties and supply chain disruptions.
To note, the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) rose to 50.7 in June from 49.9 in May, returning above the neutral 50-point threshold as new orders and output resumed growth.
TA Research said the return of the index to expansion territory suggests underlying demand conditions have improved, supporting stronger factory output and a brighter outlook for the economy.
Based on the historical relationship between the PMI and gross domestic product (GDP) growth, the research house said the latest readings indicate both manufacturing output and the broader economy are likely to strengthen in the 2Q.
“The PMI averaged 50.7 during the quarter, improving from 50.1 in 1Q26, indicating a modest acceleration in manufacturing activity and signalling a more supportive environment for economic growth,” it said.
TA Research added that the stronger PMI performance points to continued improvement in the manufacturing sector, a key driver of Malaysia’s industrial activity.
The average PMI for the first half of financial year 2026 stood at 50.4, up from 48.9 in the corresponding period last year, suggesting manufacturing activity remained broadly stable.
The research house said the recovery in manufacturing activity appeared to be driven by genuine demand growth rather than inventory adjustments, reinforcing expectations of stronger manufacturing GDP and overall economic growth in the 2Q.
